First class. Using embedded finance to ensure better customer journeys

Retail Financial Services

06 October 2022

Bank and Brand Distribution of Retail Financial ServicesConsumer DutyCustomerEmbedded financeFCAPartnershipRetail Financial Services

Expert: Sebastian Schusman Facilitator: Ben MacGregor


  1. Embedded Finance is about solving a financial need for a consumer at the very point they need it and making lives easier particularly around living, consuming & travelling
  2. Embedded finance only works if it’s seamless. Any time there is friction in the process you lose customers
  3. There will always be gaps in the system which is why you need to be FCA compliant
  4. A key point for embedded finance is to ‘meet the customer where they are comfortable’
  5. After ease of use, the key criteria includes what is the payments conversion rate (conversion is king!); transaction/process must be safe & secure; needing to solve a problem for the user


Uber is a great example of how users do not see the complicated number of integrated processes that go on in the background. Klarna is another good example – helps both the merchants (more sales, bigger sales) and consumers (additional credit quickly, and cash flow issues). CX is fundamental to a successful EF product. 

Some delegates wondered that, if there are multiple businesses involved in the ecosystem, how does each one take ownership of the protection of the end user? It was suggested that it is a bit more difficult when you are four steps away from the end customer. This is something that needs to be considered. 

There were a number of comments from delegates around this point – generally mentioning how they would love to be able to simplify the process, and get on selling their brand/product etc. Even a business like Monzo who built their stacks from scratch are finding increasing complexity. Could EF or open banking be the solution here to simplify? By leaving the tech and journey to partners in order to get on with selling to the customer where they feel comfortable.

Delegates wondered whether there was a BAAS single point of entry, or single partnership, which could administer all these relationships across multiple markets? No one was aware of a solution – you would still need a banking partner in each jurisdiction.

It’s not about the banks – it’s about the customer. The benefits include less friction, better user-journeys, more choice, lower cost and better consumer protection. Good examples include BNPL for e-commerce, Airslip (EF at POS) or Funding Circle (loans available via APIs).

Banks do benefit too, as well as smaller financial institutions via new revenue streams, no distribution challenges, no compromise in CX/brand, and speed to market etc.

There were questions around how EF improves customer protection. Could be through secure customer authentication. The point was made that better protection can also be layered in.

Key takeaways:

  • The blurring of lines between FI’s and non-FI’s as more and more businesses’ embedded finance options
  • It is important then to ‘focus on what you are good at’ – i.e., banks are good for security and regulation, businesses like Man Utd have strong brands where people are interested. Do you build, or sell?
  • Ultimately, brands don’t want too many relationships – it could therefore be easier to use EF to reduce the number of partnerships
  • With EF you could just use one partner – you build a great front face and then the partner does all the backend work – so only one contract/partnership is needed